Debt ceiling mindmeld — Bottom line — Brazilian president still going to Goldman

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DEBT CEILING MINDMELD: WHY THE WHITE HOUSE WON’T NEGOTIATE — Republicans appear to believe that if they pass a relatively clean bill funding the government before Sept. 30 they will have more leverage to force concessions from the White House and Democrats in the Senate during debate over raising the debt ceiling. This may turn out to be a significant miscalculation. President Obama has said publicly he will not negotiate over the debt limit and administration officials say privately this is not just a ploy to get the GOP to accept a limited offer when the time comes to lift the borrowing cap in the middle of October.

Instead, the administration firmly believes that continuing to allow the debt limit to be used as a political weapon would set a very damaging historic precedent that would create permanent risk around the full faith and credit of the United States where none previously existed and do lasting damage to the nation’s economy. Senior Democrats acknowledge that debt limit increases have been tacked onto pieces of fiscal legislation in the past. But they say this was always done to make the debt limit vote easier for everyone and that an opposition party never seriously threatened to force the country into default if it did not get its way.

To allow the kind of governance-by-hostage taking to become the norm would be unacceptably corrosive and would likely mean a default would ultimately occur when high-stakes negotiations fail, according to this line of thinking. Democrats also note that Republicans could easily declare victory based on the level of spending currently being discussed, which is well below what most Democrats view as desirable. This does not mean the White House is not still willing to cut some kind of big fiscal deal. But it would have to include revenues, something the GOP has said is off the table.

BOTTOM LINE — If we get close to the mid-October X date when Treasury runs out of special moves to stave off default will the White House relent and agree to negotiate? Right now the answer seems to be a firm no.

BRAZILIAN PRESIDENT STILL GOING TO GOLDMAN — Brazilian President Dilma Rousseff ripped the U.S. at the UN on Tuesday and cancelled a state visit to the White House over the NSA surveillance revelations. But per a source she's “still planning to bring most of her cabinet to Goldman's NYC HQ Wednesday for a 3-hour session devoted to raising private sector money for critical infrastructure in Brazil. The conference, hosted by Goldman President Gary Cohn, brings together major institutional investors and Brazilian gov't officials to brainstorm on ways to finance major projects in advance of the World Cup and Olympics.” More on the Brazilians dissing the U.S.: http://politi.co/1gYqHLd

HOUSE GOP CONSIDERS ATTACHING OBAMACARE DELAY— POLITICO’s Jake Sherman and John Bresnahan: “The House Republican leadership is seriously considering attaching a one-year delay of Obamacare’s individual mandate to the Senate bill to avert a government shutdown, according to senior GOP aides.

If House Republicans decide to go this route, it would all but provoke a government shutdown, since Senate Democrats might not even schedule a vote on a bill that includes that provision … Even if the Senate schedules a vote, there might not be time to move the legislation through the slow-moving chamber.

“The House Republican leadership is planning its next move as it becomes abundantly clear that Texas Sen. Ted Cruz’s gambit to defund Obamacare will fall short. The federal government is set to shut down Tuesday unless a new funding bill is enacted, and the Senate might not even send a bill to the House until Sunday — leaving a hot potato on Speaker John Boehner’s lap shortly before a government shutdown. ... In a bid to help House Republicans respond to the Democratic Senate, some GOP senators have been discussing accelerating the consideration of the CR so the House has more time to weigh legislative options to keep the government open” http://bit.ly/18XCCnq

CRUZ UP ALL NIGHT — POLITICO’s Burgess Everett: “Ted Cruz seized control of the Senate floor on Tuesday at about 2:42 p.m. vowing to ‘speak in support of defunding Obamacare until I am no longer able to stand.’ But Cruz cannot stop a Senate now in motion from eventually returning a clean continuing resolution to the House … Under Senate rules, the latest the upper chamber will take the first procedural vote on a House spending bill that defunds Obamacare is 1 p.m. on Wednesday … In other words, it’s all over save for the theatrics. … Cruz touched on a wide variety of subjects during his marathon, from Dr. Seuss to college kids’ inability to find White Castle burgers during the wee hours because of Obamacare.” http://bit.ly/16pyjXX

POLL BLAST: OBAMA RATING DROPS; NOT AS LOW AS GOP — Bloomberg’s Mike Dorning: “President Barack Obama’s 45 percent job approval is at its lowest level since September 2011, according to the Bloomberg National Poll of 1,000 adults conducted Sept 20-23. … 44 percent favorability of the Democratic party is at a two-year low; 34 percent positive rating of Republicans is the worst ever … 32 percent say Obama has pursued wrong policies; 28 percent blame Republicans for stymying the economy … For the first time ever, more view Obama unfavorably personally: 49 percent to 47 percent.” http://bloom.bg/15rzKEC

THIS MORNING ON POLITICO PRO FINANCE – Items on Sen. Debbie Stabenow asking the CFTC to examine possible problems in the market for ethanol credits, Wells Fargo losing its bid to get a court to toss allegations it defrauded FHA and deputy Treasury secretary nominee Sarah Bloom Raskin making the rounds on the Hill. … The latest on the JPMorgan’s “London Whale” settlement. … To learn more about Pro's subscriber-only coverage — and to get Morning Money every day before 6 a.m. —please contact Pro Services at (703) 341-4600 or info@politicopro.com.

GOOD WEDNESDAY MORNING — It's clear now the New York Yankees are not making the playoffs this year. But a case can still be made that Joe Girardi, who kept the club in the race despite losing nearly the entire roster to injury at different times, deserves consideration as manager of the year: http://es.pn/18ol1cf. Follow me @morningmoneyben or email me at bwhite@politico.com. Follow @morningmoneypro for alerts as well as other financial news from POLITICO Pro Financial Services, and @POLITICOPro.

DRIVING THE DAY — Senate begins a series of votes expected to conclude with a clean CR to send to the House by Sunday … House members return to DC after a short break … MBA mortgage applications at 7 a.m. expected to be close to last week’s 188.1 … Durable goods orders at 8:30 a.m. expected to drop 0.2 percent and rise1.0 percent ex-transportation … New homes sales at 10 a.m. expected to rebound to 420K from 394K.

TOP STORY: PROGRESS WITH IRAN? — FT’s Geoff Dyer: “President Barack Obama and his Iranian counterpart, Hassan Rouhani, backed a new drive for diplomacy over Iran’s nuclear programme on Tuesday. The US president told the UN that there was ‘the basis for a meaningful agreement’. Mr Obama said he was directing John Kerry, US secretary of state, to ‘pursue this effort with the Iranian government’, together with the other leading powers that have been involved in negotiations over Tehran’s nuclear programme. … The new push behind talks followedcomments and gestures from Mr Rouhani which indicated Iran might be willing to negotiate a deal that would allow it to develop nuclear energy but prevent it from developing a weapon.” http://on.ft.com/15SI2Up

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HOT READ: DID TRADERS GET EARLY LOOK AT FOMC DECISION? — CNBC’s Eamon Javers: “The Federal Reserve says it is contacting news organizations to discuss the rules surrounding lock up procedures and the release of market moving information … Working off of a list provided by the Fed of news organizations participating in last week's lock up, CNBC contacted each of the news organizations that offer low latency data services to ask whether they transmitted any data out of the Fed's lockup room. … It is not clear whether that would violate the Fed's rules. The Federal Reserve declined to tell CNBC whether or not it would be a violation of their rules to transmit information out of the lockup room before 2 p.m.” http://cnb.cx/16GTVsZ

JPM COULD PAY OVER $3 BILLION TO END PROBES — WSJ’s Devlin Barrett and Robin Sidel: “J.P. Morgan Chase … has offered to pay about $3 billion as it seeks to settle criminal and civil investigations by federal and state prosecutors into its mortgage-backed-securities activities … The Justice Department rejected that sum as billions of dollars too low for the number of cases involved … But the discussions have widened to include other investigations of J.P. Morgan, and the final tally could be larger, the person said. A settlement on residential mortgage-backed securities would solve one of the bank's biggest legal problems. The largest U.S. bank by assets faces at least seven Justice Department probes, on matters ranging from energy trading to its hiring practices in China.” http://on.wsj.com/1baVXJH

HENSARLING: REGULATION CAUSED CRISIS — House Financial Services Chairman Jeb Hensarling in an American Banker op-ed: “The great tragedy of the financial crisis … was not that Washington regulations failed to prevent it, but instead that Washington regulations helped lead us into it. Federal policies designed to expand homeownership in an ‘off-budget’ fashion encouraged lending to people who bought homes they could not afford to keep. Perhaps not surprisingly, a federal government which lives beyond its means tragically encouraged American families to do the same.”

DUMB COMMENT OF THE DAY: BENMOSCHE EDITION — WSJ’s Leslie Scism: [AIG CEO Robert] Benmosche on the government’s campaign against partial ‘bonuses’ to be paid to hundreds of employees in the AIG financial-products unit as they unwound massive, ill-fated bets on mortgage bonds. He said ‘less than 10’ employees were behind the bad trades. … The uproar over bonuses ‘was intended to stir public anger, to get everybody out there with their pitch forks and their hangman nooses, and all that — sort of like what we did in the Deep South [decades ago]. And I think it was just as bad and just as wrong.’” http://on.wsj.com/1b4a006 Benmosche later apologized for the remark: "It was a poor choice of words. I never meant to offend anyone by it." http://bit.ly/15SOqLk

FISCAL FLY AROUND

LEW ON DEBT CEILING DEADLINE — Per Dow Jones: "Treasury Secretary Jacob Lew on Tuesday said U.S. tax receipts came in a little lower than expected over the summer, adding urgency to the Obama administration’s calls for an increase to the nation’s borrowing limit. The Treasury last month told Congress the federal government would run out of borrowing room around mid-October and be unable to pay all of its bills soon after that time.

‘“When we hit the end of our ability to borrow we’ll have some cash. I told Congress just a couple of weeks ago that our estimate at the time was about $50 billion. Because things have come in a little slower…that number is smaller than 50 now,” Mr. Lew said at a conference organized by Bloomberg News.” http://on.wsj.com/18obiCG

DEFAULT DOESN’T JUST APPLY TO BONDS — LATimes edit page: “As part of the stopgap spending bill that would ‘defund Obamacare,’ House Republicans have proposed a temporary exemption to the debt limit, ostensibly to prevent the government from defaulting on Treasury securities. But the exemption would protect only bondholders … If the Treasury can't keep the commitments Congress has already made to federal workers, contractors and beneficiaries, it could lead investors to panic, damage Washington's credit rating and exacerbate the fiscal problems the House GOP says it's trying to solve.” http://lat.ms/1baTr6c

CRUZ EFFORT FALTERS — NYT’s Jonathan Weisman: “Facing an increasingly likely defeat in his tangled procedural fight over funding the government … Cruz took to the Senate floor on Tuesday and declared he would speak ‘until I cannot stand’ to rally voters against the health care law. … Yet outside the chamber, his colleagues worked against his efforts … Others warned of political repercussions if Republicans, who hope to regain control of the Senate in next year’s elections, were seen as contributing to a shuttering of the government. ‘Getting the majority in the Senate in 2014 is possible, and we don’t want to go down roads that make it harder,’said Senator Lindsey Graham, Republican of South Carolina, who is up for re-election next year. ‘Repealing Obamacare is a goal all Republicans share,’ he added, ‘but the tactics of achieving that goal can have a backlash.’” http://nyti.ms/15SHCgH

U.S. OWES “DUTY TO THE WORLD” — FT editorial: “If this were another country, such dysfunction would be a cause for regret. In the case of the US, the effects are global.

As the sole superpower and provider of the international reserve currency, the US owes a duty to the world, as well as to itself, to uphold one of the most basic functions of a nation state. Flirting with a government shutdown is pantomime enough. Toying with whether the US will honour its sovereign debt obligations is pure recklessness. …

“Over the past three years, Capitol Hill’s taste for fiscal crises has taken steam out of the US recovery and remains the chief obstacle to more robust growth. … [T]he impact of a government shutdown would be trifling compared to that of a sovereign default, which will take place in mid to late October if Congress cannot agree on a new debt ceiling. That would cause a market meltdown and bring lasting damage to US credit worthiness.” http://on.ft.com/18ogINX

ALSO FOR YOUR RADAR —

G.E./RIO TINTO ON U.N. DEVELOPMENT GOALS — G.E. CEO Jeffrey Immelt and Rio Tinto CEO Sam Walsh in a Forbes op-ed: “This week heads of state are gathering at the United Nations to discuss new sustainable development goals. Like the Millennium Development Goals that preceded them, those being discussed this week have a challenge at their core: Create broad economic benefits, while preserving the ability of future generations to continue to progress.

“As leaders of two global businesses with strong commitments to sustainable development, we believe the business community must be a full partner in designing and achieving these goals. … Businesses can leverage their resources and expertise in ways that drive growth in developing economies and bring innovative solutions to solve sustainable development challenges.” http://onforb.es/14Fm4mX

FIRST LOOK: AIRLINE MERGER DEFENDED — Per note from Hamilton Place Strategies out this morning: “The U.S. airline industry has a long history of consolidation including some 22 Chapter 11 filings since 2000. In August, DoJ filed suit to block the proposed merger of US Airways and American Airlines arguing it would result in less service and higher fares for consumers. But when adjusted for inflation, average airfares are lower now than they were in 2000. … If DoJ prevents the merger of American and US Airways, it will have to explain why it believes this merger will result in fare increases despite historical trends suggesting otherwise and how this merger is different than the United and Delta mergers it approved.” http://bit.ly/18XRv9e

WANT TO FLY OUT OF VENEZUELA? GOOD LUCK! — Reuters’ Girish Gupta and Andrew Cawthorne: “If you live in Venezuela and want to fly abroad, get in line.

Flights are booked solid months in advance, not from a new interest in exotic destinations but because locals are profiting from a play on the nation's tightly controlled currency market. … ‘It's like you're trapped here,’ said travel agent Doris Gaal, telling a customer he would be better off taking a boat to a Caribbean island because the daily flights are fully booked. … After a decade of currency controls set up by late socialist leader Hugo Chavez in 2003, the disparity between the official and black-market rates for the local bolivar currency is higher than ever.” http://reut.rs/1baU6Ve

BE AN AGRICULTURE PRO: Pro Agriculture, the second of three new Pro policy areas launching this fall, will debut on Wednesday, Oct. 2 and will feature breaking news and inside analysis from our best-in-the-business reporters. To learn more about Pro Agriculture, e-mail info@politicopro.com or call (703) 341-4600.

FIRST LOOK: NEW CBA LEADERS — Per release going out later this morning:

“The Consumer Bankers Association (CBA) is pleased to announce its newly elected leadership for 2014, with Andy Harmening, Senior Executive Vice President and Regional Banking Group Head of Bank of the West, named as Chair of its Board of Directors. … Union Bank’s Timothy Wennes, Vice Chairman and Chief Retail Banking Officer, has been named Chair-Elect. All three will serve on CBA’s Administrative Committee, which is charged with oversight of CBA’s operations.”

SAC COULD SETTLE FOR $1.5 BILLION — WSJ’s Michael Rothfeld, Jenny Strasburg and Susan Pulliam: “Federal prosecutors, seeking to cap a major chapter in an insider-trading crackdown, proposed settling a criminal case against hedge fund SAC Capital Advisors LP for $1.5 billion to $2 billion … At a meeting late last week at the U.S. attorney's office in Manhattan, SAC lawyers argued for a lower settlement amount — and that a separate $616 million civil regulatory penalty SAC agreed to pay earlier this year be deducted from any criminal sanction … SAC lawyers are expected to present a counteroffer to prosecutors in coming weeks, the people said.” http://on.wsj.com/1gYyCIe

** At JPMorgan Chase & Co. we are committed to using our expertise, capital and global reach to help solve the world’s most pressing challenges. That’s why we have partnered with the Bill and Melinda Gates Foundation to launch the Global Health Investment Fund — a first-of-its-kind vehicle for mobilizing investment capital to advance vaccines and other technologies that have the potential to save millions of lives from HIV/AIDS, tuberculosis, malaria and other deadly conditions that disproportionately affect people from low-income countries. Investors in this debut offering include Grand Challenges Canada, KfW Bankengruppe, IFC, the Children’s Investment Fund Foundation, GlaxoSmithKline, Merck, The Pfizer Foundation, Storebrand, JPMorgan Chase and qualified individual and institutional clients of our Private Bank, with catalytic support from the Bill & Melinda Gates Foundation and the Swedish International Development Cooperation Agency. The Fund will be managed by LHGP Asset Management. Learn more at www.jpmorganchase.com/ghif **